If a Customs Union Includes the Low-Cost Supplier of the World

question 56

True/False

If a customs union includes the low-cost supplier of the world, there would be no adverse trade diversion effect that would counteract the positive trade creation effect.

---

Definitions:

Treasury Shares

Shares that were issued and subsequently reacquired by the issuing corporation, not considered when calculating earnings per share or dividends.

Issued

The process of distributing something, such as a publication, a financial instrument, or an official document, to the public or to a specific group.

Outstanding

Refers to shares that are currently issued, sold, and held by investors, excluding treasury shares held by the company itself.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable, and inventories.